Daniel Pagano, 61, the son of the late reputed mob boss Joseph Pagano, was arrested at his home in Ramapo by detectives with the Rockland District Attorney's Office and the FBI. An alleged associate, Michael Palazzolo, 49, was also arrested.

Both men are accused of participating in a racketeering conspiracy. Palazzolo is also charged with conspiracy to commit extortion.

Pagano's attorney, Murray Richman of the Bronx, declined to comment on the charges but said Pagano pleaded not guilty Thursday in U.S. District Court before Magistrate Sarah Netburn. He said Pagano planned to put up his house on Cherry Lane in Airmont as collateral for bail under an arrangement with prosecutors.

Pagano was identified by prosecutors as a captain in the Genovese crime family. As a capo, Pagano ran a crew and paid money from the gambling operation to the leaders of the crime organization, they said.

The indictment accuses Pagano and Palazzolo of participating in a conspiracy involving gambling and using threats and extortion to collect money from gamblers.

Pagano faces a potential prison term of 20 years, while Palazzolo faces up to 40 years.

Rockland District Attorney Thomas Zugibe said his office's organized crime unit led by Detective Lt. William Michella began looking into Pagano in 2009 with eavesdropping warrants and obtained enough evidence to bring in the FBI in 2010.

Zugibe said the indictment potentially delivers a "significant blow to the Genovese crime family"– named for the late mobster and heroin dealer Vito Genovese.

U.S. Attorney Preet Bharara said: "Just as they have for decades, members of La Cosa Nostra... continue to use muscle and intimidation to threaten and extort New Yorkers." He said the indictment shows the mob cannot "operate with impunity."

"You may bully your way into financial gain but ultimately you will pay the price," Bharara said.

This is not Pagano's first brush with the law. He was sentenced to nearly nine years in federal prison after being convicted in 1998 of leading a tax scam related to bootleg gasoline sales involving Russian mob figures.

He also served three years in New York state prison from 1990 to 1993 for gambling and loan sharking.

Back in 1983, Pagano was accused of being involved with the Rev. Al Sharpton in business dealings and drugs. Sharpton has repeatedly denied the allegations.

Pagano's father-in-law, Vincent DeVito, was shot dead in 2003 in the backyard of his Airmont house. DeVito had been tied to the robbery of $100,000 and jewelry from a millionaire businessman living in Piermont. No one has been arrested in DeVito's killing.